The IMF will present its World Economic Outlook today. The report, released four times a year, is expected to paint
The IMF will present its World Economic Outlook today. The report, released four times a year, is expected to paint a dim picture of the global economy. Global growth projections for 2019 and 2020—3.2% and 3.5%, respectively—are expected to be cut for the fourth report in a row, although possibly only by 0.1%.
Today’s Outlook will likely attribute the sluggish growth to the ongoing trade war between the US and China. Indeed, IMF Managing Director Kristalina Georgieva stated last week that the total loss from the trade war could add up to $700 billion—the size of Switzerland’s economy—as soon as next year.
However, should the US and China work out a trade deal—still a long way off despite Friday’s phase one agreement—various drags on growth remain. A disorderly Brexit is the greatest short-term risk to the global economy due to fears that it would spark a European recession that would likely spill over to other economies.
Meanwhile, the longer the trade standoff between Washington and Beijing lasts, the more enduring its consequences for the global economy will be. Specifically, global supply chains—increasingly fragmented by the trade war—will be difficult to repair, hampering the global economy’s potential for growth.
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